Australian Government Scraps $500,000 Lifetime Non-Concessional Contribution Cap
The Australian Government has today outlined changes to the Australian superannuation proposals which had been included the May 2016 Federal Budget. The proposed lifetime cap of $500,000 on non- concessional contributions (which includes pension transfers from the UK) had been the subject of much contention in parliament and had not been passed. In a compromise, the Government revised its proposal to allow an amount of up to $100,000 p.a. in non concessional contributions to be added to Australian superannuation on an annual basis until an overall Australian superannuation fund limit of $A1.6m is reached. Further, it is likely that the work test will remain, requiring people aged 65-74 to meet an Australian superannuation work test to enable the contributions to be paid in, No further contributions to be allowed to Australian super once a member has a balance of A$1.6m, and Three years of contributions will be able to be contributed at once (ie a 3 year roll up) for under 65s. It is understood that the Australian opposition (Labour) had already been briefed on these changes prior to them being announced.
The net impact of these announcements is a positive for Australian expats as well as people who plan to move to Australia and who have overseas pensions. It once-again allows proper global pension planning to be undertaken, considering options between holding funds in Australia as as opposed to overseas. Please contact us for further information or to discuss how you could be impacted.